A quarterly newletter by the Boston Chapter of the Association of Legal Administrators

Making the future happen - Law Firm Strategic Planning

By Kevin W. Costello

In today’s competitive environment, any firm that strives to exceed client expectations and to be responsive, well-positioned and profitable needs a long-range strategic plan.   This plan must be both visionary and achievable.   It also must maintain a focus on the current practice and operations.  The firm must, in effect, keep “both hands on the wheel” to achieve long-term success.    

 

This approach, used at Hewlett-Packard, Xerox and other Fortune 100 companies, is called the Hoshin strategic planning process.  The Japanese term hoshin kanri can be generally interpreted as direction (setting) management.  The words nichijo karni can be interpreted as daily (fundamental) management.  The blending of these two prongs is the key to the Hoshin planning process.A modified version of this approach offers law firms a powerful long-range planning philosophy while ensuring that they leverage the core strengths that have made them successful. 

 

In its simplest form, the strategic plan begins with an assessment of the firm as it currently exists.  This assessment is its “current reality”.  The firm then determines where it wants to be in two to five years.  This determination should be a breakthrough vision that the firm does not expect to change.  This is its desired “future state”.   We then assess gaps we need to fill or identify areas of focus that will allow the firm to reach its vision.   These are the “key business initiatives” that  form the road map from the firm’s current reality to its desired future state. 
  

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Current Reality
The planning process begins with an assessment of where the firm stands today.  What are its competitive advantages and what has made it successful.  This step should include an analysis of strengths, weaknesses, opportunities and threats (SWOT).

 

Desired Future State
Any successful business must have a vision of where it wants to be in the future.  The firm should articulate this vision in a mission or vision statement to ensure that the entire firm is focusing on a common goal.  It must be achievable and believable.  I generally look three years out and ask, “What do we want to be in three years?”  This is a long enough period to drive real change, but short enough that we can see the goal line. 

 

Key Initiatives
How do we get from our current reality to our desired future state?  We identify two to four key initiatives that fill the gaps between today and tomorrow.  Just one initiative probably means that the firm is setting its sights too low; more than four are too complex and thus risk failure.  The firm should clearly define each initiative and establish a means of measuring it.  It should set milestones to ensure that it does not lose its focus on its vision. 

 

For example, one key initiative might be the development of a litigation practice.  Milestones could be: recruiting three litigation rainmakers, launching a marketing campaign, identifying and landing a $1 million client and achieving $5 million in litigation revenues.  Following the measurement of the results of each milestone, the firm will deem the initiative a success if it completes all of them. 

 

Keep an eye on the ball
The second prong of Hoshin planning is to maintain focus on the core business of the firm.  The firm must continue to excel at what has made it successful and strive to improve its daily operations.  This critical focus on daily operations enables sound financial performance during the extended period of time set for achieving the business initiatives identified as key for reaching the desired future state. 

 

The annual planning and budgeting process is a key component of the hoshin process.  It is a financial tool to maintain the firm’s short term focus while driving the organization forward to meet longer-term objectives. It should clearly identify process and cost improvement opportunities and incorporate them into the plan.    

 

Breaking through the day-to-day grind to make the future vision happen requires extraordinary effort and focus.  It is essential that all the partners in a firm embrace the desired future state and work together to achieve it.  The entire partnership must clearly communicate a common mission and allocate the financial and human resources to ensure the key initiatives are successful.   

 

The Hoshin planning process is cyclical.  Each year, the firm reviews the objectives and makes any needed changes.  By having measurable objectives, the firm can learn from both its successes and failures and thus improve the objective-setting process and achieve its long-term goals.

 

Law firms can gain significant advantages by adopting the Hoshin planning process.  This process forces the firm to establish the long term goals that are critical for success and provides a measurable roadmap to achieve those goals.  Its added focus on continuing improvements to the existing business make it a great method to ensure long-term success.  

 

About the Author:  Kevin W. Costello is the Executive Director of Campbell Campbell Edwards & Conroy Professional Corporation.  He is a former financial executive at Hewlett-Packard where he was introduced to the  Hoshin strategic planning process.